Abstract

http://ssrn.com/abstract=1492238
 
 

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Efficiency Analysis of Microfinance Institutions in Developing Countries


Kabir M. Hassan


University of New Orleans

Benito Sanchez


University of New Orleans - College of Business Administration - Department of Economics and Finance

October 1, 2009

Networks Financial Institute Working Paper 2009-WP-12

Abstract:     
This paper investigates technical and scales efficiencies of microfinance institutions (MFI) in three regions: Latin America countries, Middle East and North Africa (MENA) countries, and South Asia countries, and compares efficiencies across regions and across type of MFIs. We find that technical efficiency is higher for formal MFIs (banks and credit unions) than non-formal MFIs (nonprofit organizations and non-financial institutions). Furthermore, South Asian MFIs have higher technical efficiency than Latin American and MENA MFIs. The source of inefficiency is pure technical rather than scale, suggesting that MFIs are either wasting resources or are not producing enough outputs (making enough loans, raising funds, and getting more borrowers).

Number of Pages in PDF File: 22

Keywords: Poverty, Microfinance Institutions, Efficiency Analysis and Data Envelopment Analysis, Government Policy

JEL Classification: C14, G29, L31

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Date posted: October 22, 2009  

Suggested Citation

Hassan, Kabir M. and Sanchez, Benito, Efficiency Analysis of Microfinance Institutions in Developing Countries (October 1, 2009). Networks Financial Institute Working Paper 2009-WP-12. Available at SSRN: http://ssrn.com/abstract=1492238 or http://dx.doi.org/10.2139/ssrn.1492238

Contact Information

Kabir M. Hassan (Contact Author)
University of New Orleans ( email )
2000 Lakeshore Drive
New Orleans, LA 70148
United States
504-280-6163 (Phone)
504-280-6397 (Fax)
Benito Sanchez
University of New Orleans - College of Business Administration - Department of Economics and Finance ( email )
2000 Lakeshore Drive
New Orleans, LA 70148
United States
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